Consumer mobility helps lift demand in July3 min read . Updated: 21 Jul 2021, 04:50 PM IST
- As restrictions are being lifted, consumers are planning to spend more on discretionary items like clothing, footwear, electronics
New Delhi: Consumer goods companies, including those selling packaged foods, electronics and apparel, are reporting a faster recovery in sales in July compared to last year as buyers hit large markets in Delhi-NCR, Bengaluru and Mumbai.
“July has been the first month in this financial year when the markets are completely open. Consumption is better than last year July, and the lead categories are refrigerators and washing machines. Demand is up by over 20% year-on-year," said Kamal Nandi, business head and executive vice president, Godrej Appliances.
A consumer tracker released by Deloitte earlier this week reported a 6% decline in overall consumer anxiety among Indians compared to the first wave. Deloitte has been tracking consumer mood across major global markets since the onset of the pandemic. In its latest report, it tracked consumer sentiment among respondents from India till 30 June covering the second wave of covid-19 infections.
The pace of vaccination has helped in “uplifting the consumer sentiment," it said. The tracker reported a slight increase in discretionary spends post lifting of restrictions in June.
Working from home has resulted in a large amount of savings at both employees and employers’ end. With no rent and transportation costs, people have been able to save the majority of their salary. At the beginning of the second wave, people restricted themselves to spending more on essential items. However, as the restrictions are being lifted, consumers are planning to spend more on discretionary items like clothing, footwear, electronics, etc, the report said.
“We are at exactly the same level as 2019 despite so many restrictions, except for markets in south and west India," said the CEO of a foreign fashion brand in India declining to be named. He attributed this to pent-up demand. “We are seeing higher conversion and basket size and units per transaction is up from 2.2 to 3," he said. Besides, competition in the market has reduced too. "So strong brands getting stronger," he added.
Pawan Sarda, group CMO—digital, marketing and e-commerce, Future Group said that recovery in categories such as apparel is much better than post-unlock last year. This is true for formats such as Fashion at Big Bazaar. “It's more than just pent-up demand—it is the need to feel good. As and when things are opening up, I think people do want to venture out, that's for sure," he said.
Mall owners and restaurants, on the other hand, are yet to report a turnaround in business. In states like Maharashtra, restaurants are still working under restricted timings and malls are yet to reopen. “As a result, recovery in Delhi, Chandigarh and Bangalore has been faster compared to West because there’s a 4 pm deadline. It will only get better with better timing," said Mayank Bhatt, business head at cafe-bar chain Social, part of Impresario Handmade Restaurants.
In contrast to the unlocks last year when consumers were apprehensive about returning to stores, this year, with staff and consumers vaccinated, diners are returning way quicker, said Bhatt.
Meanwhile, in Delhi, malls are reporting steady recovery. However, the ongoing closure of cinema halls and gaming zones is denting business.
“The present steadiness in sales leading to recovery can be attributed to pent-up demand from consumers. People were bored sitting in their homes, and thus are escaping to tourist destinations, malls etc to take the much-needed break from confinement. Adding on the demand recovery, the coming festive months will be very crucial for the malls," said Abhishek Bansal, executive director, Pacific Group that operates malls in Delhi-NCR. Recovery is led by categories such as FMCG, digital technology, gadgets and apparel, he said.
Bansal however flagged an impending third wave as well as the 15-day ‘Shradh’ period when Hindus pay homage to their ancestors and refrain from shopping and celebrations.
Mumbai-based Parle Agro that sells beverages under the Frooti, and Appy Fizz brands reported a 45% growth in demand in the first few weeks of July compared to 2019. Nadia Chauhan, joint managing director and chief marketing officer attributed this to new launches and relaxations in markets that resulted in better mobility.
Data from retail intelligence platform Bizom on sales of fast-moving consumer goods suggests that sales of daily goods grew nearly 40% between June and July. “In Pandemic 2.0, it's the urban centres that are recovering faster than rural unlike last time. Urban Tier-2 cities have shown a strong rebound in sales for FMCG in June-2021," the company said.
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